Westpac Slashes Variable Home Loan Rates To 5.84% Amid Growing Competition Among Banks

Westpac, Australia's second-largest bank, has lowered its variable home loan rates by up to 35 basis points as competition among lenders increases.

The bank is now offering new customers a variable home loan rate of 5.84%, matching the lowest rate among the country's four biggest banks, News AU reported.

However, to qualify for this rate, customers must apply online and have a 30% deposit.

Canstar's data insights director, Sally Tindall, called this a "great news for people with a home loan," adding that banks were now competing to attract new customers by offering better refinancing deals.

"However, the rock bottom rates are reserved for new customers with decent sized deposits so they will need to switch lenders or at least haggle if they want to be a winner in the refinance war," Tindall added.

According to the latest ABS data, over AU$206 billion in loans were refinanced in 2024, even though the official cash rate remained at 4.35%. Canstar expects refinancing activity to increase after the Reserve Bank of Australia (RBA) lowered the cash rate to 4.10% in February.

Westpac joins the digital lending race

Westpac's decision to compete directly with ANZ Bank is being seen as a positive move for customers. Tindall explained that for months ANZ had the lowest variable rate among the big four banks with its digital-only home loan, followed closely by CBA.

With this change, Westpac has now surpassed CBA, leaving NAB behind. Three of the big four banks are now competing in the digital lending space, aiming to attract customers who are willing to apply online.

Canstar's analysis shows that homeowners in Australia can find better interest rates with lenders outside the big four banks. Even with the new rates from major banks, more than 35 other lenders are offering at least one variable rate below 5.75%.

Currently, Pacific Mortgage Group, People's Choice, RACQ Bank, The Capricornian, and Australian Mutual Bank offer the lowest advertised refinance rate at 5.64%.

While this move benefits customers, banks in Australia are also supporting their employees.

For example, last month, while major banks in the United States started moving away from remote work, Australia's top banks -- Commonwealth Bank, NAB, ANZ, and Westpac -- continued to allow employees to work in a hybrid system.